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BYRON Shire Council has transformed its smelly tip into a money spinner, earning $150,000 from carbon credits.

The credits were earned through the council's Myocum Landfill gas flare project in which methane is collected in pipes and then burnt at temperatures between 700 to 800 Celsius to create carbon dioxide; up to 24 times less damaging to the environment.

The gas flare project was approved under the federal government's Carbon Farming Initiative in September last year.

Under the scheme, each carbon credit represents one tonne of carbon dioxide equivalents (CO2-e).

Projects that avoid emissions of methane, for example methane from the digestive tract of livestock, or projects that avoid emissions of greenhouse gases from the operation of a landfill facility are eligible for credits.

The council earned 6,616 Australian Carbon Credit Units (ACCUs) which were sold at a price of $22.60 per unit for a total return of $149,521.60.

Byron mayor, Simon Richardson congratulated staff for taking the initiative to turn a problem into a significant financial win for Council.

"What started out as a landfill odour problem, turned into a winning solution with a gas flare installed to remove the odour, plus a potential revenue stream through the carbon farming initiative," he said.

The council's manager of waste and recycling, Warren Burgess, said the carbon credits were sold to a Queensland state-owned energy provider.

"The company fitted well with the council's resolution that the credits be sold to a company that was attempting to reduce its CO2 emissions and only emitted CO2 due to the nature of its operations," he said.

The money made from the carbon credit sale will initially be used to offset the cost and maintenance of the flare system, but could later be used as seed funding to establish a Greenhouse Gas Emissions Reduction Fund.

"When initially launched, the scheme had a set price per unit which provided surety and incentive to allocate funds for new infrastructure or technology that would reduce carbon emissions," Cr Richardson said.

"It would also mean that any future sales of carbon credits from the Myocum Landfill gas flare may be significantly lower than our current achievement of $22.60 per unit."

The Carbon Farming Initiative allows farmers and other land managers to earn carbon credits by storing carbon or reducing greenhouse gas emissions on the land.

These credits, known as Australian Carbon Credit Units, can be sold to people and businesses wishing to offset their emissions.

The initiative also helps rural communities and the environment supporting sustainable farming by creating incentives for landscape rehabilitation.

In much the same way as financial markets trade in different currencies, carbon markets trade different types of carbon credits.

For example, carbon permits are generally issued by governments as part of a carbon pricing mechanism and carbon offsets are issued for abatement projects through schemes like the Carbon Farming Initiative.